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(SINGAPORE) Lack of land for oil storage on Jurong Island has prompted Royal Vopak - one of Singapore's biggest independent tank farm operators - to consider building a big new terminal in neighbouring Johor.
Vopak signed a memorandum of understanding (MOU) this week with Malaysia's Dialog Group to look at building a 1.4 million cubic metre facility at Pengerang on the southern tip of Johor, at a reported cost of US$1 billion.
Vopak - already a partner of KL-listed Dialog in a 395,900 cubic m tank farm for chemicals and liquefied natural gas at Kertih, Terengganu - said that if the study is positive, the two will form a joint venture with the Johor authorities to develop a 200 ha site into a deepwater storage terminal.
At Tuesday's MOU signing, Dialog's managing director and chairman Ngau Boon Keat reportedly said that Singapore - the region's oil trading hub - has insufficient land for expansion. But at Pengerang, a massive five million cubic m terminal can be developed, he added.
Industry observers here agree that a shortage of waterfront land on Jurong Island limits expansion there. JTC is keen to reserve prime sites for higher value-added investments such as refineries and petrochemical complexes.
Vopak has four oil and chemical tank farms in Singapore - at Banyan, Penjuru, Sakra and Sebarok on Jurong Island - with a total capacity of 2.59 million cubic m.
Last month, Singapore oil trader Hin Leong announced plans to expand storage capacity 30 per cent to three million cubic m at Universal Terminals, its Jurong Island joint venture with PetroChina. This expansion could take place on an inland plot between Universal Terminals and Chemoil's Helios Terminal - not a waterfront site.
Two international oil traders with offices in Singapore - Glencore and Vitol - have resorted to storage facilities in Johor because of a shortage of capacity here.
Glencore has leased 800,000 cubic m of floating space at Tanjong Pelapas, while Vitol committed RM1 billion (S$411.5 million) last September to develop a 750,000 cubic m terminal at the Tanjung Bin Petroleum Centre.
To meet demand for storage here, JTC is about to embark on construction of the first phase of Jurong Rock Cavern - five underground chambers that will provide 1.47 million cubic m of storage when completed by 2014.
So far, only Jurong Aromatics Corporation, which is planning a multi-billion dollar petrochemical complex, has committed to use the caverns.
But more players could be drawn, an industry observer said, adding: 'They are only interested in two things - the cost of using the facility and its efficiency - and will come in if satisfied with both.'
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